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SAN FRANCISCO (MarketWatch) -- Investors can learn some lessons from gold's past, but don't expect them to stick. The gold market isn't exactly the same now as it was then.

As frustrating and unpredictable as gold has been in the past few years, it parallels history at times -- and sometimes it's anyone's guess. Analysts blame that on the metal's changing market.

"The entrée of large institutional players have most definitely altered the gold landscape to the point where it is no longer the same old game," said Jon Nadler, a senior analyst at Kitco Bullion Dealers. See related archived story.

"This new reality has infused additional volatility and counter-intuitive trading patterns into the gold market equation," he said.

So in short, you can learn a lot about gold and where it may go by comparing it to what it's done before in similar situations but in the end, you may end up without a clue.

Categorizing recession

Take some of the market crashes of the past for example.

"There are certainly some parallels that can be drawn with 1987, 1929 and the 1970s," said Mark O'Byrne, director of GoldandSilverInvestments.com.

He stressed the word "parallels" and insisted that no one can actually "compare any one previous market crisis or crash as they are all so different."

And as investors "tread through the ongoing credit crisis," gold will likely act very differently than it has during past stock market corrections or crashes, said David Beahm, vice president of marketing and economic research at Blanchard.

It's difficult to know how this crisis will evolve; there are so many variables, said O'Byrne. And how the U.S. government and the Federal Reserve responds to the situation will largely "dictate whether a coming recession is deflationary, hyperinflationary or a virulent strain of stagflation."

"Gold would perform differently in each type of recession," O'Byrne explained. Gold would be the "asset class to own in a hyperinflationary or severe stagflationary scenario as it was in the brutal hyperinflation in Germany in the 1920s and in the stagflationary U.S. in the 1970s," he said.

In a deflationary scenario, gold prices might fall along with stocks and property, but fall by "far less" than other asset classes, he said.

In that scenario, a "combination of gold, but also cash, treasuries and conservative, fiscally prudent government bonds would be where investors should protect their wealth," he said.

Nadler said that while gold has historically fallen along with the value of other assets during times of deflationary crises, it's usually been in the initial stages.

"This time around, things may be different, insofar as both such a decline as well as any subsequent recovery may well be intensified by the presence of institutional players in the marketplace," he said.

"The gold market is much broader than in the past, and [most importantly] there are new players in the equation [hedge funds for one] whose trading motivation and patterns may not only go counter to the intuition and behavior of individual investors, but who have shown a predilection for treating gold as simply another asset without regard to its historical attributes," Nadler said.

Historical moves

A study of past recessionary periods will help traders come to some sort of conclusion or prediction on the gold market, but that should only be a reference point because so much of gold's market has changed.

Ned Schmidt, editor of the Value View Gold Report, points out that up and into the 1930s, central banks "hoarded" gold and private ownership was banned. That situation doesn't exist today.

And in 1929, gold was backed by the dollar and "thus did not fluctuate in price," said O'Byrne. "When stocks lost 90% of their value, gold was money and retained its value 100%."

Gold was then revalued to $35 from $22, or by some 60%, in 1933, he said. So "even in a massive deflationary event, gold massively outperformed all asset classes and performed its safe-haven role."

During the stock market crash in 1987, the price of gold reacted positively -- at first, then it gave back its gains and more, according to Beahm.

The main difference between then and now, however, was gold's inability to move freely, he said.

In 1987, major gold producers were or were starting to use forward selling, or hedging, to their advantage. "This prohibited gold from moving freely and behaving as a safe haven for investors long term," he said. Now these producers are closing their hedge books.

"De-hedging reached a record high in the second quarter [of 2007] as a wave of buybacks led to a provisional 5.2 million-ounce cut" from gold producers' hedge books, precious metals consultancy GFMS reported Tuesday, in a study complied for Societe Generale.

"Since major dehedging began in 2002, gold has begun to move more freely and the price of gold has increased more than 100%," said Beahm.

This is now

So what's happening now? Plenty.

Current catalysts for gold prices include: inflation, especially global inflation, geopolitical concerns, rising demand for gold, moves in the dollar and others -- in addition to the global financial crisis, said Dan Hassey, a senior research analyst for Boca Raton, Fla.-based Gold & Energy Advisor.

Some believe a lot of those factors are already in the price of gold and that's why gold has not moved much -- it's already doubled in the last five years with investors having anticipated some of these problems and bidding up the price, he said.

Even so, the seriousness of the financial situation is obvious. "A massive liquidity hole has opened in Europe as a consequence of the collapse of the U.S. mortgage market," said Ned Schmidt, editor of the Value View Gold Report. And "the pipeline for money from investors to the real economy is being ripped up."

Brien Lundin, editor of Gold Newsletter, considers the current financial situation to be a "crisis ... similar to previous pricked bubbles."

The situation is characterized by repeated liquidity crunches in which overblown markets have forced speculators to raise cash as markets either tumble or completely shut down, he said.

"Gold has been victimized by this, as it has served as a ready source of liquidity for those desperate to raise cash," he said.

The rush to liquidity and safety at a time like this first targets cash and related instruments, said Kitco's Nadler.

"If the crisis develops into a real dire event, gold ultimately benefits by either falling less in a deflation or by rising as the official sector prints its way out of trouble and creates inflation," he said.

"Gold, by still having value, will be the only asset of choice that remains," said Schmidt. "Gold will be the 'default' ... investment choice by surviving."

So really, "the mortgage market collapse is the catalyst for Wave III, and the next step to over $1,400 for gold," Schmidt said.